Lectures and seminars which will be devoted to discussions of the major issues in monetary economics and the recent developments in the financial markets.
- Introduction: role of money and the payments system.
- Financial instruments and financial markets.
- Yield differentials and the impact of inflation and taxation on interest rates.
- The term structure of interest rates.
- The theory of financial intermediation.
- Management of interest rate risks and the concept of duration.
- Public policy issues in the financial system, Bank Act revision and re-regulation of the financial markets.
- Deposit expansion by chartered banks and near banks and the determinants of the money demand and money supply process.
- Bank of Canada and the conduct of monetary policy under different policy regimes.
To introduce students to the elements of monetary economics and the role of deposit-taking institutions in the process of financial intermediation in the payments system. At the end of the course, the student will be able to:
- demonstrate an understanding of the functions of money, and other basic financial instruments, the credit creation process and competing theories of financial intermediation.
- demonstrate an understanding of the various theories of the term structure of interest rates, the real rate of interest and the impact of inflation and taxation on the pattern of interest rates.
- demonstrate an understanding of the concepts of duration and management of interest rate risks by financial institutions.
- explain the rationale for the revisions of the Bank Act, and the re-regulation of the financial markets -- including the role of deposit insurance.
- analyse the determinants of the money demand and money supply processes in the context of the conduct of monetary policy by the Bank of Canada.
|Term Exams||30% - 70%|
|Assignments||0% - 20%|
|Final Exam||30% - 40%|
|Class Participation||0% - 10%|
THERE WILL BE A MINIMUM OF THREE (3) EVALUATIONS.
Textbooks and Materials to be Purchased by Students
The main text is to be chosen from the following, as determined by the instructor:
- Binhammer, H.H. Money, Banking & The Canadian Financial System, Latest Ed. Nelson Canada.
- Mishkin, F. and A. Serletis. The Economics of Money, Banking, and Financial Markets, Canadian Ed. Addison Wesley Longman.
- Siklos, P. Money, Banking and Financial Institutions, Latest Ed. McGraw-Hill Ryerson.
Supplementary materials may be chosen from the following, as determined by the instructor:
- Bank of Canada Review (various issues).
- Various published or unpublished articles pertaining to the course content.